I didn't pay close attention to financing at the time. I didn't know states had shifted so much of the risk to Wall Street. I should have guessed. Why would any politician take $1 million per year for 40 years when he could have $10 million now?

A lot of people want that cow dead. Besides, I'm not hearing the wailing coming from the states. I'm hearing the wailing coming from investors dumb enough to be duped by the bankers who were hired by the state to sell these things. With no taxing authority bound to the bonds, the states can just shrug this off. Yay free market.

So a bunch of people were betting that more people would continue to be addicted to cancer sticks and they lost money? So either less people started smoking or more died from it faster than was expected. The whole thing is ghoulish.

So, what you're saying is that it is wrong to tax an industry and product which places a disproportionate burden on society, through Medicaid and Medicare dollars thanks to diseases caused by long term use of cigarettes, but you're perfectly ok that up to 50% of your Medicare dollars go to pay for it.

So, what you're saying is that it is wrong to tax an industry and product which places a disproportionate burden on society, through Medicaid and Medicare dollars thanks to diseases caused by long term use of cigarettes, but you're perfectly ok that up to 50% of your Medicare dollars go to pay for it.

Smokers DO burden the healthcare system, but ironically, DON'T burden things like Social Security...since they tend to die right as they would start collecting.

The tobacco companies actually ran the math back during the initial litigation, but didn't pursue that angle for obvious PR reasons.

Further, death by lung cancer is actually quite cheap compared to living for years in a nursing home.

ZAZ:I didn't pay close attention to financing at the time. I didn't know states had shifted so much of the risk to Wall Street. I should have guessed. Why would any politician take $1 million per year for 40 years when he could have $10 million now?

butbutbut the free market... oh, wait, I guess the market was forced to buy these bonds. Why not say "Wall Street chose to take on the risk"? States amortize all of the time, selling bonds to pay for capital expenditures and (in this case) to normalize investment income. I suppose that the people who take the cash option in the lottery are selfish or stupid, too?

I would also point out that the tobacco companies are withholding large amounts of cash, but the article makes that clear. Oh, someone didn't RTFA?

I have to say that after being in enough countries where you can't go anywhere in public without ending up reeking of cigarette smoke, I appreciate the restrictions on smoking in the US and I'm happy to see tobacco companies lose money.

Yeah, government shouldn't have relied on that income, but I honestly didn't expect otherwise. If the choice is between taking tobacco money or raising taxes, you know the state isn't going to raise taxes if they can help it.

* 2.8 million premature deaths would be avoided between then and 2025. During the same time, healthcare spending would decrease by $211 billion (only 1.25%)

* States would have decreased Medicaid costs

* A small increase in social security (about 1.58%, the book estimates) as workers would be living longer, but retiring later

However:

* States would lose the revenue they get from cigarette excise taxes, that was $13.75 billion in 2006, an overall of 1.4%

* health care costs would be lower at first, but after 15 years they would become higher than at present. In the long term, complete smoking cessation would produce a net increase in health care costs

* Tobacco manufacturers gave $143 billion away between 1997 and 2005 - 42% of which went to public health and community development programs. That money would probably disappear. Nationally, though, that's only about 3% of corporate giving

* According to a paper by the NBER, Americans will get fatter if they stop smoking

Asides:

* only 10% of smokers get cancer

* At least 17,000 people who have never smoked are diagnosed with lung cancer each year. That's more people than are killed annually in the US by drunk drivers, or by murderers, or by high blood pressure ... and account for 10 percent of those diagnosed with lung cancer (20 percent if you include those who quit smoking years ago)

For the states dumb enough to issue bonds that required them to raise taxes if the bonds defaulted...hey, being stupid sucks. Remain stupid and these things are going to happen to you over and over.

For the investors that were dumb enough to invest in bonds that *didn't* require states to raise taxes if the bonds defaulted...hey, being stupid sucks. Remain stupid and these are going to happen to you over and over until you run out of money.

And I can't help but giggle at any invest that managed to combine into one toxic package bond issuing investment bankers, brain dead credit rating bureaus, retarded state governments AND tobacco companies. And people bought the bonds.

That's like having unprotected butt sex with a heroin addicted transvestite hooker on a mattress tossed on the floor of a crack house filled with rival gang members, and then being surprised when something goes wrong.

So, what you're saying is that it is wrong to tax an industry and product which places a disproportionate burden on society, through Medicaid and Medicare dollars thanks to diseases caused by long term use of cigarettes, but you're perfectly ok that up to 50% of your Medicare dollars go to pay for it.

Came here to say BronyMedic is an idiot, and came away satisfied someone else beat me to it.Take a basic economics class overlaid with a dose of logic.

Aside from getting hit by a bus we all die the same way--after lengthy and expensive end-of-life medical procedures. The fact that heavy smokers and drinkers may die significantly earlier than they normally would have is a net cost savings to society.

/Side note--All this anti-smoking rancor made my dad very wealthy, so thanks.//Love how the old man learned how to play the game back in the '70s.

tapping special tobacco-bond reserves to pay their bondholders, something analysts consider a technical default because it effectively means the bondholders are being paid with their own money.

So, they want people to keep buying the bonds, and then take that money to pay the people who have already bought in ? Hmmmmmmmm.....

BronyMedic:So, what you're saying is that it is wrong to tax an industry and product which places a disproportionate burden on society, through Medicaid and Medicare dollars thanks to diseases caused by long term use of cigarettes, but you're perfectly ok that up to 50% of your Medicare dollars go to pay for it.

As a former smoker, I understand the increased taxes and understood it when I was smoking. The problem is the states upped the taxes to encourage people to quit (good thing), and then the tax revenue died down because their plan worked. By that time, they were dependent on the money so they had to increase the taxes again. You can only repeat that cycle so many times.

Now they have to pay the piper (bond holders). It won't be long till they go looking for money elsewhere (property tax, sales tax, gas tax,....) its just a matter of who they go after next.

So, I guess my point is, while the ultimate goal of the states was a good thing, they did piss poorly with the money they got from it.

rumpelstiltskin:A lot of people want that cow dead. Besides, I'm not hearing the wailing coming from the states. I'm hearing the wailing coming from investors dumb enough to be duped by the bankers who were hired by the state to sell these things. With no taxing authority bound to the bonds, the states can just shrug this off. Yay free market.

The states are complaining though, just not in this article. They are making less than they forecast and that money it's spent. Just like what happened with sales taxes and property taxes. And it's all someone else's fault they overspent.

I've been saying for ages how ridiculous it was for states to simultaneously try to reduce smoking and at the same time become dependent on cigarette taxes and payments from the tobacco companies as sources of revenue.

It's a glaring conflict of interest that a fifth-grader could identify, and it was bound to come to a head sooner or later.

Dozens more companies eventually signed the pact, and the other four states reached their own settlements independently. But dozens more tobacco companies, including the China National Tobacco Corporation, China's giant state-owned company, did not sign.

The states passed laws requiring the holdouts to put substantial sums into state-owned escrow accounts, but the companies have challenged those laws as unconstitutional. The tobacco companies that did settle contend that the states have given those that did not sign an improper market advantage, and they have been withholding part of the money they would otherwise be sending every year.

This is a big part of the problem. The payments are supposedly fines for the tobacco companies having fraudulently or whatever enticed people into smoking with child-directed advertisements, denials that cigarettes cause lung problems, and so on, and not taxes on the back of the poor addicts who have been ungratefully kicking the habit in response.

The problem with this is companies which did not import tobacco into the USA or which did not exist in the period the settlement is about, do not have to pay the "penalties". Or feel they should not have to since they were not involved. And the legal settlements say that if a fraction of the market is taken over by these other companies the paying tobacco companies get their fines reduced by the same fraction. The amount the tobacco companies are withholding is specified in the legal settlements.

Both companies like the China National Tobacco Corporation and Native American tobacco companies and other new ventures are not happy with the idea that they should be penalized for the past conduct of others, or that they should be discriminated against in any way competing on price with a monopoly of companies who are paying the fines.

Gwyrddu:I have to say that after being in enough countries where you can't go anywhere in public without ending up reeking of cigarette smoke, I appreciate the restrictions on smoking in the US and I'm happy to see tobacco companies lose money.

Yeah, government shouldn't have relied on that income, but I honestly didn't expect otherwise. If the choice is between taking tobacco money or raising taxes, you know the state isn't going to raise taxes if they can help it.

Tobacco companies are doing just fine thank you very much. Don't confuse declining smoking rates in America with tobacco company profits.

Earl of Chives:Gwyrddu: I have to say that after being in enough countries where you can't go anywhere in public without ending up reeking of cigarette smoke, I appreciate the restrictions on smoking in the US and I'm happy to see tobacco companies lose money.

Yeah, government shouldn't have relied on that income, but I honestly didn't expect otherwise. If the choice is between taking tobacco money or raising taxes, you know the state isn't going to raise taxes if they can help it.

Tobacco companies are doing just fine thank you very much. Don't confuse declining smoking rates in America with tobacco company profits.

Gee, Keynesian Bullchit did not cover this.Profits are up, business is down. Go figure.

snocone:Small potatoes.Just wait to see what is left of the airline industry in 5 years.

As long as the sheeple continue to buy tickets, no matter the indecencies and indignities pushed on them, just to travel about the country, that will never happen...

Also an ex-smoker, and when my cousins are complaining at $10 a pack in California, I have to wonder why they didn't quit when it went over $5... I quit when it went over $4, but that's because I didn't feel like lining someone else's pocket over my bad habits...

Arcturus72:snocone: Small potatoes.Just wait to see what is left of the airline industry in 5 years.

As long as the sheeple continue to buy tickets, no matter the indecencies and indignities pushed on them, just to travel about the country, that will never happen...

Also an ex-smoker, and when my cousins are complaining at $10 a pack in California, I have to wonder why they didn't quit when it went over $5... I quit when it went over $4, but that's because I didn't feel like lining someone else's pocket over my bad habits...

Look to the future, my friend. It will get worse. A work in progress.TSA is growing.Like rust, it does not sleep.